Senator Scott Wiener Announces Legislation to Take Over PG&E

On Monday, Senator Scott Wiener (D-San Francisco) introduced Senate Bill 917, which aims to takeover PG&E. The move would convert PG&E into a publicly owned utility.

“The status quo is broken and we need a new approach to deliver energy in northern California,” said Wiener who credited Governor Gavin Newsom for his work in making clear that the status quo is not working and PG&E cannot come out of bankruptcy with business as usual.

Wiener said his legislation is the commencement of a process to purchase PG&E with the State Power Authority to oversee the process and the new company would be called the Northern California Energy Utility District with a public benefit corporation managing day-to-day operations.

“This legislation is long overdue and will improve the quality of life of Californians, more safer, and more reliable and affordable energy. To be blunt, it will put an end to the dangerous roller coaster ride that we have been on with PG&E over the past decade. PG&E is a failed company,” said Wiener. “What was always true, has become more clear, PG&E business model is broken. PG&E focuses so extensively on pleasing wall street and creating returns and dividends for shareholders, that it has allowed its infrastructure to deteriorate.”

He continued by saying given the situation, they now have an opportunity to make “real” change and not rely on blackouts which impact those that need power on.

Wiener says that his bill has language in it that protects the PG&E workers which he said the transition must make PG&E workers whole.

“PG&E workers will be transitioned over to the new entity and collective bargaining agreements, benefits, wages, and retirements,” said Wiener. “These workers have been doing their job under the worst of circumstances and they should be protected.”

The structure of the new state-run utility would be modeled off the Long Island Power Authority in New York.

LEGISLATIVE COUNSEL’S DIGEST

SB 917, as introduced, Wiener. California Consumer Energy and Conservation Financing Authority: eminent domain: Northern California Energy Utility District: Northern California Energy Utility Services.

Existing law creates the California Consumer Power and Conservation Financing Authority, with prescribed powers and responsibilities, including the issuance of revenue bonds, for the purposes of augmenting electrical generating facilities and to ensure a sufficient and reliable supply of electricity, financing incentives for investment in cost-effective energy-efficient appliances and energy demand reduction, achieving a specified energy capacity reserve level, providing financing for the retrofit of inefficient electrical powerplants, renewable energy and conservation, and, where appropriate, developing strategies for the authority to facilitate a dependable supply of natural gas at reasonable prices to the public. Existing law prohibits the authority from approving any new program, enterprise, or project on or after January 1, 2007, unless authority to approve such an activity is granted by statute enacted on or before January 1, 2007.

This bill would rename the authority the California Consumer Energy and Conservation Financing Authority and would repeal the prohibition upon the authority approving any new program, enterprise, or project, on or after January 1, 2007. The bill would authorize the authority to acquire, by eminent domain, the assets or ownership of an electrical corporation, gas corporation, or public utility that is both an electrical and gas corporation, including any franchise rights, if that corporation has been convicted of one or more felony criminal violations of laws enacted to protect the public safety within 10 years of the date the eminent domain action is commenced. The bill would authorize a local publicly owned energy utility, as defined, to elect to join in the eminent domain action brought by the authority and acquire that portion of the electrical or gas system necessary to provide service within its borders if the local publicly owned energy utility contributes its proportionate share of the compensation paid for the assets or ownership of the public utility. The bill would establish the Northern California Energy Utility District, with a governing board elected by district and with powers and duties similar to a municipal utility district, to provide electrical and gas service, and authorizes the authority to transfer any public utility acquired by eminent domain to the district or to a local publicly owned energy utility that participates in the eminent domain action. By providing for misdemeanor liability for violations of the duties of the general manager or directors of the district, this bill would impose a state-mandated local program. By increasing the duties of local elections officials, this bill would impose a state-mandated local program. Until the transfer of the utility is completed, the authority would be required to perform all management duties for the utility and operate the utility in trust. The bill would state the intent of the Legislature that the acquisition by eminent domain and transfer of those assets or ownership interest acquired be completed within 5 years of initiation of the eminent domain action. The bill would repeal the existing $5,000,000,000 upper limit upon the authority’s ability to issue bonds and replace that limit with an unspecified amount. The bill would require that any bonds issued by the authority solely to acquire the assets or ownership interest of a public utility acquired by eminent domain so recite and be secured by a dedicated rate component in the rates of the public utility acquired. The bill would require that any transfer to the district include provisions preserving a dedicated rate component as security for any bonds issued by the authority to acquire the assets or ownership interest acquired.

The bill would require the authority to take the steps necessary to ensure the earliest possible incorporation of Northern California Energy Utility Services pursuant to the Nonprofit Public Benefit Corporation Law. The bill would require that Northern California Energy Utility Services be governed by a 7-member governing board representing nonoverlapping districts of roughly equal population within the service territory of any public utility the assets or ownership of which is acquired by the authority through eminent domain. The bill would provide for the appointment of those board members. The bill would require that the authority assign all nonmanagement employment contracts of employees of a utility the assets or ownership of which has been transferred to the authority to Northern California Energy Utility Services and those employees would become employees of Northern California Energy Utility Services upon that assignment. Until transfer of the utility to the district is completed, the bill would require the authority to transfer sufficient moneys, collected by the authority out of the rates of the utility, to Northern California Energy Utility Services to pay the salaries and benefits of all employees and independent contractors of the corporation and any other debts lawfully incurred by Northern California Energy Utility Services.

Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including electrical corporations and gas corporations. Existing law provides that the commission has no authority to establish rates or regulate the borrowing of money, the issuance of evidences of indebtedness, or the sale, lease, assignment, mortgage, or other disposal or encumbrance of the property of any electrical cooperative, but that electrical cooperatives are otherwise subject to the regulatory authority of the commission pursuant to the Public Utilities Act. Under existing law, local publicly owned electric utilities, including a municipal utility district operating an electrical utility, are under the direction of their governing boards.

This bill would provide that following completion of the acquisition of a public utility by the authority through eminent domain and the authority assuming its duties as trustee of the utility, the commission would have no authority to establish or fix the rates and charges of the utility, to regulate the borrowing of money, the issuance of evidence of indebtedness, or to regulate the sale, lease, assignment, mortgage, or other disposal or encumbrance of property of the utility, but otherwise would have that authority granted to the commission relative to the safe and reliable performance of utility services by an electrical or gas corporation, until the utility operations are fully transferred to the district. Following completion of the acquisition of a public utility by the authority through eminent domain and upon Northern California Energy Utility Services becoming functional, the bill would provide that the commission would have no authority over the rates and charges paid to Northern California Energy Utility Services by the authority, by the district, or by a local publicly owned energy utility and the commission would have no authority as to the sale, lease, assignment, mortgage, or other disposal or encumbrance of property for its employees, but otherwise would have that authority granted to the commission relative to the safe and reliable performance of utility services by an electrical or gas corporation.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.

With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.